German government announces details of diesel agreement

02.10.2018

Germany's coalition government has announced details of a wide-ranging diesel deal. The agreement hopes to deal with the country's air pollution problems, without upsetting car owners — or manufacturers — too much.

At a press conference on Tuesday, German Minister for the Environment Svenja Schulze from the center-left SPD said that a combination of trade-in incentive schemes and still unspecified retrofit options would be introduced for drivers of older diesels in and around the 14 German cities with the highest level of nitrogen dioxide (NO2) pollution.

Those cities are Munich, Stuttgart, Cologne, Reutlingen, Düren, Hamburg, Limburg an der Lahn, Dusseldorf, Kiel, Heilbronn, Backnang, Darmstadt, Bochum and Ludwigsburg. Schulze said she hoped the deal would avoid diesel bans in various German cities. "I believe we've got a big deal on the way here," she told reporters.

According to a coalition document, seen by the news agency DPA, drivers in the affected areas will have the choice of opting for a trade-in or a retrofit scheme. However, details on the retrofit schemes remain sketchy, with Germany's big carmakers Volkswagen (VW), Daimler and BMW unusually reticent in their early reaction to the news.

Transport Minister Andreas Scheuer from the Bavarian CSU said that the trade-in schemes — whereby drivers of older diesels could trade them in for new models at generous discounts — would be available to drivers immediately. Retrofit schemes, which would see car manufacturers install new hardware in older diesel engines aimed at reducing emissions levels, would take longer to agree fully on with car manufacturers.

He said that Germany's biggest automobile manufacturer, VW, had agreed to assist with retrofits but had yet to agree on the full details of precisely how they would be implemented. Premium carmaker Daimler, said Scheuer, had said it "will think about retrofits" but would focus at this time on trade-in incentive schemes of up to €5,000 ($5,758).

While there are new spending commitments and rule changes in the package, there is no legal mandate on drivers or manufacturers to organise retrofits.

However, the government has committed to funding 80 percent of the potential retrofit costs on some heavy vehicles, for example rubbish trucks, that operate in the most polluted areas. In addition, it will fund 80 percent of the retrofit costs for trademen's vehicles, delivery vans and trucks and some other commercial vehicles operating in those same areas.

They remained tight-lipped on the details of the plan at that stage, saying only that the agreement was "highly complex" — hinting at its mix of partial, regionally-based retrofits and upgrade schemes for motorists, as well as the uncertain outline as to who exactly would foot the bill.

The backdrop to this long-awaited agreement is twofold. Three years ago, it was revealed that Volkswagen had installed cheating devices in 11 million of its vehicles worldwide, allowing it to dishonestly beat emissions checks and spew out far more hazardous nitrogen oxides (NOx) than it was legally allowed to.

The prospect of diesel bans in German cities has made the issue a major political topic

That scandal, known as Dieselgate, set in train a politically-charged debate about the use of diesel in Germany. However, the urgency to find some kind of satisfactory solution has been turbo-charged by the growing issue of air pollution in scores of German cities. More than 60 German cities exceeded EU limits for NOx in 2017, including several of the country's primary urban centers.

With a partial driving ban already in place in Hamburg, and with similar bans expected to follow in Stuttgart, Frankfurt and Düsseldorf, among others, the need to end uncertainty over the future of diesel cars in Germany. Sales of diesels in the country have fallen sharply since their peak before the Dieselgate scandal three years ago.

However, while ministers Scheuer and Schulze were bullish on the merits of the deal that had been agreed, information on future retrofit schemes was scant. Extensive hardware retrofits, if agreed to by a majority of car manufacturers, could potentially cost the industry billions.

Newer diesels from the so-called 'Euro 6' range (from September 2014 on) spew out much lower levels of NOx, so retrofits would primarily apply to the older 'Euro 5' and 'Euro 4' cars. There are 5.5 million 'Euro 5' diesel vehicles on German roads at present and around 3.1 million 'Euro 4' vehicles.

Europe's battle against deadly air pollution

Cutting back on diesel

Germany has launched a scheme to retrofit its diesel public buses with exhaust-scrubbing systems, and introduce charging points to encourage drivers to switch to e-cars. Still, environmentalists say that's not enough. They want all diesel vehicles — including private cars — retrofitted, or taken off the road.

Europe's battle against deadly air pollution

Taking cars off streets

Milan, one of Italy's most polluted cities, has banned cars from its downtown area during certain hours. Other cities in Italy and abroad have experimented with similar schemes, for example permitting only cars with odd or even license plates on the road at given times in order to limit the amount of traffic.

Europe's battle against deadly air pollution

Free public transport

The Macedonian capital of Skopje is battling with pollution levels up to 15 higher than permitted by the EU — though it's not yet a member state, so isn't facing fines. Macedonia's smog problem is largely down to burning coal and emissions from aging, inefficient industry and vehicles. To get people to leave their dirty old cars at home, the government has introduced free public transport.

Europe's battle against deadly air pollution

Sounding the alarm

One street in London exceeded the EU's annual nitrogen dioxide limit on January 30 — less than a month into 2018. Actually, this is an improvement — it's the first time in a decade the British capital has kept within the annual limit for more than six days. Mayor of London Sadiq Khan has announced he wants to alert the city's schools on days when pollution is particularly bad.

According to a Volkswagen insider, quoted by the news agency Reuters, the car manufacturer still believes that retrofits are the wrong solution for avoiding diesel bans in German cities. The insider also said that Volkswagen had not agreed to fully cover the cost of potential retrofits.

In a telling public comment on the matter, Volkswagen works council boss Bernd Osterloh said the government's announcement was good news for jobs in the the industry as the commitment to blanket retrofits was "off the table."

As hard as it has proven for the German coalition to convince the country's car manufacturers to agree to foot the bill for retrofits, it has proven harder still for them to convince foreign manufacturers to play along.

Opel, a German brand now owned by the French company Peugeot SA, said on Tuesday it rejected the concept of hardware retrofits as the technology was not yet fully developed and because it was not economically sensible.

"In addition, it would take too long to implement them," the company said in a statement.